Free Motion for Partial Summary Judgment - District Court of Federal Claims - federal

Case 1:87-cv-00435-EGB

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

GATEWAY LUMBER CO., et al. (Gateway Lumber Co.), Plaintiffs, v. THE UNITED STATES, Defendant.

) ) ) ) ) ) ) ) ) )

Consolidated under lead case No. 87-435C (No. 87-435C) (Judge Bruggink)

DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT IN GATEWAY LUMBER CO. v. UNITED STATES, NO. 87-435C Pursuant to Rule 56(a), we respectfully request that the Court enter partial summary judgment as to liability against Gateway Lumber Company ("Gateway") and in favor of the United States on its counterclaim in this case. Partial summary judgment is appropriate because no genuine issue as to any material fact exists regarding Gateway's breach of contract and the United States is entitled to judgment as a matter of law.1 In support of this motion, we rely upon the pleadings, our accompanying proposed findings of uncontroverted fact, the Declaration of Christine Anderson, the documents reproduced in our appendix, and the following memorandum of law.

Like Mt. Adams Veneer Co. v. United States, No. 91-984C, this is a no-resale case. In a June 22, 2004 Order in Mt. Adams, this Court concluded that, where the Forest Service chose not to resell, a trial was necessary to resolve factual issues surrounding the Forest Service's appraisal of the value of the timber remaining upon contract termination and the resulting determination of damages. Accordingly, our motion in this case seeks summary judgment as to liability only. -1-

1

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DEFENDANT'S MEMORANDUM OF LAW Nature Of The Case Plaintiff, Gateway Lumber Company ("Gateway"), challenges a contracting officer's final decision assessing damages against it as a result of the company's failure to perform the Eldred Creek Timber Sale contract. The United States counterclaims for the damages due under the terms of the contract. Statement Of The Facts A statement of the relevant facts is set forth in our accompanying proposed findings of uncontroverted fact. Argument I. Summary Judgment Is Appropriate Summary judgment is appropriate where, as here, no genuine issue as to any material fact exists and the moving party is entitled to judgment as a matter of law. Rule 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987). Summary judgment is properly regarded not as a disfavored procedural shortcut, but as "a salutary method of disposition 'designed to secure the just, speedy, and inexpensive determination of every action.'" Sweats Fashions, Inc. v. Pannill Knitting Co., Inc., 833 F.2d 1560, 1562 (Fed. Cir. 1987) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986)). A "material" fact is one which "might affect the outcome of the suit under the governing law" and a dispute as to a material fact is "genuine" only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Liberty Lobby, 477 U.S. -2-

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at 248; Sweats Fashions, 833 F.2d at 1562. Moreover, as the Federal Circuit emphasized in Sweats Fashions, "the burden is not on the movant to produce evidence showing the absence of a genuine issue of material fact." 833 F.2d at 1563 (emphasis in original). Rather, "'the burden on the moving party may be discharged by 'showing' ­ that is, pointing out to the [court] ­ that there is an absence of evidence to support the non-moving party's case.'" Id. (emphasis in original) (quoting Celotex, 477 U.S. at 325). In this case, partial summary judgment in favor of the United States is appropriate because no genuine issue as to any material fact exists regarding Gateway's breach, and the United States is entitled, as a matter of law, to a judgment as to Gateway's liability. II. Gateway's Failure to Perform Constitutes a Breach of Contract; Gateway's Breach Is Unexcused as a Matter of Law. Under the terms of the Eldred Creek timber sale contract, Gateway was obligated to cut, remove, and pay for all of the timber included in the sale by the contract termination date (as extended). Gateway failed to do so. DPFUF ¶ 5-11;2 D. App. 12-24. Gateway's failure to perform constitutes a material breach of contract. Capital Development Co. v. United States, 49 Fed. Cl. 178 (2001), aff'd sub nom. Seaboard Lumber Co. v. United States, 308 F.3d 1283 (Fed. Cir. 2002); Seaboard Lumber Co. v. United States, 48 Fed. Cl. 814 (2001), aff'd 308 F.3d 1283 (Fed. Cir. 2002). Gateway asserts that its non-performance is excused, alternatively, under the doctrines of commercial impracticability, impossibility, and frustration of purpose. See Gateway's
2

"DPFUF ¶ " refers to the cited paragraph(s) in our accompanying proposed findings of uncontroverted fact. Our proposed findings contain citations to documentary evidence reproduced in our appendix and to the testimony of Christine Anderson set forth in her Declaration filed with our motion. -3-

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Complaint ¶ 5. These defenses, as well as other liability defenses, have been rejected by both this Court and the Federal Circuit in prior litigation in these consolidated cases. Seaboard Lumber Co. v. United States, 41 Fed. Cl. 401, 405 (1998) ("The undisputed facts demand the conclusion that none of the plaintiffs' breaches are excused due to the contract doctrines of impossibility of performance, commercial impracticability, or frustration of purpose. Nor were the circumstances such that the `force majeure' clause found in the contracts would excuse nonperformance."), aff'd 308 F.3d 1283 (Fed. Cir. 2002). If Gateway has any additional affirmative defense or defenses, Gateway must raise them in its response to our motion. Further, to avoid summary judgment as to liability, Gateway must produce sufficient evidence to create a genuine issue as to some material fact. If Gateway fails to do so, summary judgment in favor of the United States is appropriate. Conclusion For the foregoing reasons, the United States respectfully requests that the Court grant its motion for partial summary judgment and enter an appropriate order ruling that Gateway's breach of the Eldred Creek contact is unexcused. Respectfully submitted, PETER D. KEISLER Assistant Attorney General J. CHRISTOPHER KOHN Director

s/John W. Showalter JOHN W. SHOWALTER Assistant Director -4-

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s/Richard P. Nockett RICHARD P. NOCKETT Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 1100 L Street, N.W. (8th Floor) Washington, D.C. 20530 Tele: (202) 307-1134 Fax: (202) 307-0494 Attorneys for Defendant Dated: December 22, 2005

-5-

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CERTIFICATE OF SERVICE I hereby certify under penalty of perjury that on this 23d day of December

2005 I caused copies of the foregoing "DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IN GATEWAY LUMBER CO. v. UNITED STATES, No. 87-435C," and the accompanying "APPENDIX TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT," and the "DECLARATION OF CHRISTINE ANDERSON" to be served upon the following individuals by United States mail (first-class, postage prepaid):

DENNIS J. DUNPHY, Esq. Schwabe, Williamson & Wyatt 1420 Fifth Avenue, Suite 3010 Seattle, Washington 98101-2393

-6-

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APPENDIX TO DEFENDANT'S MOTION FOR S~ARY JUDGMENT IN GATEWAY LUMBER CO. v. UNITEDSTATES. NO. 87-435C

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INDEX TO APPENDLX Document Forest Service Advertisement for the Eldred Creek Sale .................... Prospectus for the Eldred Creek Sale ................................... Forest Se~wice "APPRAISAL SUMMARY" dated Janual T 22, 1979, for the original Eldred Creek Sale ..................................... Forest Service "REPORT TIMBER OF SALE"dated March 14, 1979, for the original Eldred Creek Sale ..................................... Excerpts fi'om Gateway's Eldred Creek Timber Sale Contract ................ May3, 1982 letter to Gateway adjusting contract termination date ............. May20, 1983 letter to Gateway adjusting contract temaination date ............ "AGREEMENT TO MODIFY CONTRACT" dated August 16, 1983 ............................................... "AGREEMENTTO EXTEND AND MODIFY TIMBER SALE CONTRACT, dated September 20, 1983 ............................................ December 1985 letter to Gatewayconfirming North Side extension ......... 19, April I8, I986 letter to Gateway advising of contract termination .............. April 9, 1986 Forest Service memorandum confirming decision not to resell ..... Standard Provision B9.4 of Timber Sale Contract .......................... Eldred Creel; DamageAppraisal excerpts, Pa~__~_e 1 2-9

10

11 12-14 15-16 17

18

19-22 23 24 25 26

including "APPRAISAL SU~IMARY". 27-29 30-31 32

Contracting Officer's final decision letter dated August13, 1986 ............... Bill for Collection, dated August 6, 1986 ..................................

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-MONTE CRISTO ELDRED CREEK AD APPEARING IN THE EVERETT HERALD, FEBRUARY 12, 1979.

RoD. T.S.

NATIONAL FOREST TIMBER FOR SALE, MT BAKER-SNOQUALMIE NATIONAL FOREST. ELDRED CREEK SALE, located within T. 30 N., R. 9 E., W.M., surveyed° SEALED BIDS will be received by the District Ranger or his representative at the Verlot Ranger Station, up to and not later than 11:00 AM, local time at place of bid opening~ March 14, 1979 followed immediately by oral bidding for an estimated 5000 M board feet of timber marked or otherwise designated for cutting. The minimum acceptable bid per M board feet is: Western Hemlock and Other Coniferous Species, $126.30; All Species Cedar, $258.78. In addition, there is within the sale area an estimated 200 M board feet of Douglas-fir logs which will be paid for at $250.08 per M board feet. Additional deposit required for slash disposal is $6°38 per M board feet for all species. In addition there is w~thin the sale area an estimated 109 acres of all species logs subject to per acre pricing which will be paid for at $1.83 per acre. Additional deposit required for road maintenance on National Forest roads over the appraised route is $.13 per M board feet for all species logs priced per M board feet~ The contract includes a des_cription of the maintenance work and a breakdown of the per M board foot deposit on a per M board foot per mile basis by roads. In the event that total bid value plus required deposits for this contract exceed one million dollars ($i,000,000) an EEO compliance review will be conducted on the high bidder to determine if the provisions of Executive Order 11246 have been complied with before award can be made. All included Timber, except that not meeting Utilization Standards, is subject to Timber Export and Substitution Restrictions. Bidders are advised that violations of the Timber Export and Substitution Restrictions constitute breach of contract and may result in contract cancellation, refusal to award other timber sales to the violator, and/or debarment or suspension from bidding on future timber sales° The required bid guarantee is $41,000.00. In accordance with the National Forest Management Act of 1976, a bidder qualifying as a small business under the Small Business Act (as amended and the regulations issued thereunder) may elect at the time of sealed bid submission to have Forest Service construct the included Specified Roads. If the bidder so elects, the price paid for the timber shall include the estimated construction cost which is $228,769.00° Such road will be constructed to the design standards and in accordance with drawings and specifications included in the sample contract. Specified Roads, whether constructed by Purchaser or Forest Service, shall be completed by October 31, 1980. If the bidder elects to hate Forest Service construct the roads, Forest Service intends to perform construction by contract. When Forest Service intends to construct the road through a contract, the award of the timber sale will not--be made unless either a satisfactory road construction bid is received, or if Forest Service fails to receive such a bid within 150 days of finding the bidder's offer to be acceptable, bidder agrees to perform road construction~ Applicable Purchaser's Road Credits are $205,420.00. The right to reject any and all bids is reserved. A prospectus and information concerning the timber, the conditions of sale and submission of bids should be obtained from the District Ranger, Verlot Ranger Station, Granite Falls WA 98252 or the Forest Supervisor, 1601 Second AV Building, Seattle 98101

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TIMBER ELDRED CREEK Timber sale

SALE

FROSPECTUS MT Baker-Snoqualmie National Fore;

| Unit or Compartment I GORDON I MT Baker I Working Circle I MONTE CRISTO District

i. INTRODUCTION. This prospec~us is to furnish sufficient information in addition to that contained in the published advertisement to enable prospe tive bidders~to decide whether further investigation of the sale is warran INFORMATION GIVEN HERE OR OTHERWISE PROVIDED IS NOT A PART OF THE CONTRACT UNLESS STATED THEREIN. DETAILED CONDITIONS OF SALE ARE CONTAINED IN THE SAMPLE TIMBER sALE CONTRACT. IN THE EVENT A CONTRADICTION EXISTS BETWEEN THIS PROSPECTUS AND THE SAMPLE CONTRACT THE CONTRACT GOVERNS. Timber Sale Contract, Form 2400- 6, will be used. Sale sample contract shou be inspected before submitting a bid. The appraisal, and other informatiol on the timber, conditions of sale and bidding may be obtained at Forest Sel offices named in the attached advertisement. 2. BIDDING. Sealed bids will be received at the Forest Service offices named in the advertisement followed immediately by oral bidding . Bids mu~ be submitted on prepared forms which may be obtained from the Forest Servic offices named in the advertisement. These forms include instructions for both sealed and oral auction bids as well as for submission of the bid guaJiantee. 3. LOCATION AND AREA. Refer to the attached sale area map and to the samp contract for legal'subdivisions and location of cutting area, acreage of sale, acreage to be cut, etc. THE FOLLOWING GENERAL LOCATION, ROUTES OF ACCESS, ACREAGES AND OTHER SPECIAL LOCATION DATA DO NOT SUPERSEDE SALE AREA MAP OR SA~IPLE CONTRACT. The sale is located in Sections 23, 24, T.30N., R. gE., W.M.; approximately 9 miles east of the Verlot Ranger.Station. The haul routes are via Forest Set' Roads 3055, 3055A, 3055B, 3055Z, 4045 and the Mountain Loop Highway. There are two clearcut units containing 107 acres. In addition there are 2 acres of specified road right-of-way outside the unit boundaries for a total of i0! acres. Harvest is by skyline, highlead, tractor and mobile-yarding systems.

4. VOLUME AND DESCRIPTION OF TI~D_F~ The quality, size and age class of the timber are estimates based on detailed cruise information on file and available for inspection at the Forest Service offices listed in the advertisement: INFORMATION LISTED HF~REIN IS MADE AVAILABLE WITH THE UNDERSTANDING THAT VALUES SHOWN ARE NOT ESTIMATES OF A PURCHASER'S OWN RECOVERY AND ARE NOT A PART OF THE TIMBER SALE CONTRACT. For these reasons bidders are urged to examine the timber.sale area and make their own recovery estimates. : ~ .... R6-2456-48 Me 78)

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Forest Service field estimate of a~le volume and log quality in percent of volume by species,is:

Species

Estimated Volume and Unit of ~|easure M BOARD FEETI

Log Grades IP 2P 3P-SPi P

% IS 2S 3S

Douglas-fir All Species Cedar Western Hemlock and Other Coniferous Species

200

13

21

24

9

27

6

1300

26

4O

34

3700

7

6

58

29

Total sale area is about Approximate age 200+ Avg. Volume per tree. _ . Avg. Diameter of Stand.

138 years. GROSS.

acres.

1.009 26

M bd. ft. Inches

Estimate of Stand Defect.

. .

18 662

Percent

Total number of dead trees to be felled in sale area

In addition, subject

an

estimated acre pricing

~Z09 are

-=~

~ acres

of all the

species sale

logs, area°

to per

included

within

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5. RATES.

See

attached

bid

form.

3

THE MINIMUM ACCEPTABLE BID RATE IS STATED IN THE ATTACHED ADVERTISEMENT AND IS THE ADVERTISED RATE SHOWN ON THE ATTACHED BID FORM. It is based upon pricing procedures provided by the Timber Sale Contract, Form 2400-6.~fhis rate has been established by appraisal as though roads specified by the contract are in place. Applicable purchaser credit up to the amount shown in the advertisement will be credited to purchaser's timber sale account as specified roads are constructed and accepted. Required deposits for road maintenance and slash disposal are stated in the advertisement. Rate redetermination date None work fn a total

- Estimated Knutson-Vandenberg deposit for sale-area'betterment amount of $42,829.00 is included in total timber value. SEE SAMPLE CONTRACT FOR EXPLANATION OF TERMS AND APPLICATION

OF RATES°

6. PERIOD OF CONTRACT. The normal operating_season shall be considered to be between JUNE 1 and OCTOBER 31.o Contract termina£ion date is MARCH 31 r 1983. A gener~l operation plan showing how the purchaser plans to complete sale by the termination date must be approved by Forest Service before _~operations may begin. The Forest Service implemented a new extension policy on July policy applies to this contract. The most important provision is that extensions will normally not be granted unless: i, 1978. of that That policy

(i) Specified roads needed by the Purchaser for removal of all included timber in accordance with his approved plan of operations were constructed and accepted by the Forest Service prior to the applicable road completion date. (Not applicable when Forest Service assumes responsibility for construction of roads). (2) At least 75 percent removed from the sale area. of the advertised volume has been cut and

(3) Operations to date have been in reasonable contract terms and the approved plan of operations.

compliance

with

(4) Contractural requirements, such as snag felling, erosion control, and slash disposal, have been accepted on the area cutover, except for areas where logging is currently in progress. Purchaser's burning of current slash or grass seeding of disturbed areas may be waived as a prerequisite for extension, if weather conditions or other factors have delayed these activities.

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4

7. PAYMENTS.--Payment for timber and related charges will be required in advance of cutting unless purchaser credit is established under or transferred to this contract, or acceptable payment guarantee is provided to permit cutting in advanG~ of payments. Advance payments which the purchaser will be required to make shall be In such amounts as to cover the value of timber estimated to be cut in not less than 30 days and not more than 60 days at the applicable rates for timber and other related charges. Payment requests shall consider the operating plan and past performance of the purchaser. Deposits for cooperative scaling services must be made in advance of furnishing the services. Purchaser credit established under or transferred into this sale may only be applied to timber charges in excess of timber value at base rates. The amount which ~ay be transferred into this sale will be calculated as of .~he date Of award, Effective Purchaser Credit transferred from this sale which later turns out to be ineffective under this contract must be replaced with cash. If a qualified bidder elects t6 have Forest Service construct Specified Roads, the contract will provide for collection of not less than the full estimated cost of the roads stated in the advertisement in addition to Base Rate Value and Required Deposits. For scaled sales the cost will he collected as timber is scaled, at a rate accelerated on 80 percent of the estimated volume. Cash deposits wlll be required when payments for stumpage include less value above Base Rates than is needed to meet the collection schedule. If bidder elects the road option, payment for right-of-way timber subdivisions will be made in accordance with B4.0 payments.

8. PERFORMANCE BOND. A performaace bond will be required. The penal sum of the bond will he i0 percent of the total hid value of the sale rounded up to the nearest 3100 when the total hid value is $i0,000 or less, and rounded up ~ the nearest $i000 when the total bid value exceeds $i0,000. The maxlmumbond be $ .200,000.00 The minimum bond ~rlll not be lower than $ 86,000.00

Purchaser may request a revision in contract language to authorize deferment of payment for timber felled, but not removed, up to the penal sum of the performance bond and to increase the penal sum of the performance bond.

-

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9. SPECIFIED ROADS. See sample contract f~r verification of specific details and information concerning construction specifications. CONSTRUCTION ESTIMATES ARE NOT GUARANTEED AND INFORMAT-ION CONTAINED HEREIN, TOGETHER WITH RELATED MATERIAL, IS MADE AVAILABLE WITH THE UNDERSTANDING THAT COSTS OR QUANTITIES SHOWN ARE ESTIMATES. The following roads are those which Forest Service considers necessary to remove the timber from this sale.

Road Number

Name

Design Class

Approximate Length (Miles)

Purchaser credit Limit

Completion Date

RECONSTRUCTION 3055 ELDRED -CREEK S-10 1.14 $110,580.00 CONSTRUCTION 3055 ELDRED CREEK S-10 0.27 Oct. 31, 19

3055A .ELDRED 3055B 3055Z 4045 ELDRED ELDRED MARTEN

CREEK CREEK CREEK CREEK

S-10 S-10 S-10 S-10

0.25 0.13 0.09 0.34

$ 24,490.00 $ 21,970.00 $ 9,560.00

Oct. 31, 19 Oct. 31, 19 Oct° 31, 19 Oct. 31, 19)80

$ 22,760.00

PAY ITEMS

COMMON

TO A~ ~L ROADS

$ 16,060.00

Total applicable Purchaser Road Credits are $ 205~420.00 (Only show amounts allowed for construction or reconstruction of roads in AIO) Total estimated construction cost is $ 228,769.00 Additional Purchaser Credit (See Item Other) $ None

PURCHASER 4045

MUST

STAKE

ROAD

NUMBERS

3055~

3055A~

3055B~

3055Z,

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iO. ii.

INAPPLICABLE

STANDARD

PROVISIONS.

See sample

contract.

SPECIAL PROVISIONS.

See sample contract.

12. FINANCIAL ASSIST~qCE. The Small 'Business Administration (SBA) may he ~ble to assist small busi*~ess concerns finance construction of Speeifled Roads listed in the sample timber sale contraet~ SBA assistance, if available, may be in the form of gnaranteed bank loans or direct participation SBA leans. Applicants mus~ meet SBA size and eligibility requirements. APPLICANTS ALSO MUST ~ET CREDIT REQUIREMENTS OF SBA AND/OR A LOC~~ BA~<. APPROVAL OF LOAN ASSISTANCE RESTS WITH SBA AND IS CONTINGENT ON AVAILABILITY OF LOCAL OR SBA FUNDS. FAILURE TO BE ELIGIBLE OR TO OBTAIN A LOAN WILL IN NO WAY AFFECT REQUIREMENTS OF BID FOR ADVERTISED TI~iBER OR TIMBER SALE CONTRACT. 13. LOG EXPORT AND SUBSTITUTION RESTRICTION. ~e contract prohibits, except as specifically exempted, the export of unprocessed timber or the use of such timber in substitution for timber exported from private lands. Timber determined pursuant to public hearing to be surplus and timber not meeting utilization standards are exempt fr~n these requirements. Unprocessed timber is defined as (a).any logs of species, quantities," or grades which have not been found surplus to domestic needs meeting utilization standards and with a net scale content not less ~han 33 1/3 percent~of the gross volume in material meeting the peeler or sawmill grade requirements published in the July i, 1972, official Log Scaling and Grading Rules used by West Coast Log Scaling and Grading Bureaus; (b) cants to be subsequently remanufactured exceeding 8 3/4 inches in thickness; (c) cants of any thickness reassembled into logs; and (d) i split or round holt., or other roundwood not processed to standards and specifications suitable for end-product use (in Alaska add: and (e) chips not manufactured from logging or milling waste). Substitution is defined as the purchase of tin~er from National Forest System lands to be used as replacement for timber ~xported from private land~. Such replacement occurs when with respect to historic levels, (1) the purchaser continues to export ahd increases his purchase of National Forest timber or (2) the purchase of National Forest timber continues while the Purchaser increases his e~,-port of unprocessed timber from private lands tributary to the plant for which National Forest timber covered by a specific contract is expected to be delivered. Uistorlc level is defined as the purchase or export during 1974 or any subsequent calendar year of not to exceed ii0 percent of the average volume purchased or exported in calendar years 1971, 1972 and 1973.

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Unless agreed in wrlting otherwise, (i) all products fro~ the sale area shall be ha~er branded on beth ends with an assigned brand~ (2) each product exempt from export restrictions shall also be ha~er branded on both end~ with an exempt brand registered for use on exempt logs from National Forest timber sales, and (3) all nonexempt products shall be painted on one end ~rlth highway yellow paint. Excerpt products shall carry no yellow pa~t. For h~a bid to be considered, bidder must submit~therewlth a certification that purchase of the timber will not constitute substitution, agree to-furnish Forest Service with the na~es and locations of the manufacturing plants in which the timber i~ to be manufactured, and agree to ~ake his records as to origin and disposition of export of private 'timber available to the Forest Service upon request. Bidders are advised that false certification or violation of the export and substitution requirements may result in cancellation of the contract, refusal to.a~rard other timber sa~es~ and/or debarment or suspension from bidding on t~mber sales. 14. EQUAL EMPLOYMENT OPPORTUNITY COMPLIANCE REVIEW. In the bid value plus required deposits for this contract exceeds one ($I,00~000) an EEO compliance review will be conducted on the determine if the provisions of Executive Order 11246 have been before award can be made. event that total million dollars high bidder complied with

15. OTHER. a.-Bidders will not be permitted to change their road option election after the time for opening bids. Election must be made prior to bid opening. b. Rock pit or quarry operations are under the jurisdiction of the Mine Safety and Health Administration - MSHA. The law and regulations require pit and quarry operators to notify the applicable MSHA office prior to the start, and at the termination of operations, in a material source. c. The estimated costs for Bureau scaling include all costs, including volume summaries to be supplied to the Forest Service. d. Purchaser will construct machine firelines. e. Logs are to be lifted entirely free of the ground before yarding across the protected streams in the skyline portions of units 1 and 2. f. Logging: This sale consists of 2 clearcut subdivisions totalling 109 acres including road right-of-way. The estimated volume is 5200 M board feet. The sale was appraised for 67 acres of skyline, 8 acres of tractor, 6 acres mobile yarding and 28 acres of highlead. A skyline feasibility report was prepared and is available for review at the Verlot R_anger Station. g. Purchaser to protect water supply as shown on sale area map, B6.22, B2.31, C6.41. h. In accordance with special provision C6.6#, the Purchaser may elect to make cooperative deposits to the Forest Service to seed and fertilize landings, firelines and temporary roads. i. Purchaser operations will be limited from June 1 to October 31 for subdivision 1 and 3~ C6.311. j. Road Option. A bidder qualifying as a small business concern may elect to have Forest Service S Roads listed above (Item 9). whether~construction is

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performed by Purchaser or Forest Service. If Servic~ construction, such construction will and award will be delayed until a satisfactory bid is received, or, if Forest Service fails within 150 days of finding bidder's offer to agrees to perform road construction.

bidder elects Forest be through contracts road construction to receive such a bid be acceptable, bidder

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.....................

CARD

TYPF

5

...........................

38.15

38.18

38.15 "

25.32 0.00 11.70 15.33 (7.87) 15.33 0.00 0.00 0.25 0.25 0.00 ( 0.00) 0.00 52.69 0.00 52.69 0.00 126.29 178.98 "28.86 15.80 28.36 0.50 0.50 0.50 0.00 0.50 13.03 49-52 .28 53-56

0.30 0.30 0.30 13.42 13.42 13.42 17.72 17.72 17.72 ( 8.79)( 8.79)(8.79) 17.72 17.72 17.72 7.63 7.03 7.63 0.98 0.98 0.98 0.28 0.28 0.28 8.88 8.89 8.89 1.40 1.40 1.40 ( 0.00)( 0.00)( 0.00) 1.40 1.40 1.40 31-35 79.58 79.58 79.58 39.50 39.50 39.50 119.08 119.08 119.08 36-40 0.00 190.70 309.78 292.13 17.00 81.55 210.58 250.08 0.00 126.29 245.37 278.91 14.00 59.63 219.28 258.78 0.00 119.58 238.66 135.30 17.00 48.50 86.80 126.30

" "

7.09 .91 .oo .28

61-64 65-68 69-72 73-76

1.30 77-80 ! .00) 77.68 36.68 114.38 .00 238.52

....

9.62 8.82 8.62 0.00 0.00 0.00 250.08 258.78 128.30

853940.00 152.49 8.08 .00 152.49

0.00

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GATh~qAY LUMBER COMPANY TIMBER SALE CONTRACT (Applicable to Sales to be Scaled After Felling) NATIONAL FOREST SALE NAME ELD~D C~EK FLANGER DISTRICT REGI~N [CONTRACTNO. 19023 47th AV NE ARLINGTON WA 98223

~ SUBREGION ~ ~WARD DATE TE~AT{~ DATE , Douglas-fir ~I-19-79 M~ch 31,1983

The parties thiscontract [o a~e The United Statesof Ame~cs, ~ct~n~ throu£h the ForestService, United S[a£esDepar{mentor A£r~cu~ure, hereinafter called Forest Service, and Gatewa~~any~ 19023 47th AV ~: ~Arlington WA 98223~

a corporation organized and existing under the laws of the State of Washinqtonr hereinafter called Purchaser. 2 Forest Service having advertised~-a sale at which either (1) Purchaser, whose required bid deposit is now held by Forest Service as an initial deposit, was the successful bidder, or (2) no bids were received and Purchaser having snbsequently offered at least the minimumadvertised price and made an initial deposit in the same amount as the bid deposit specified in the sale advertisement; and the parties hereto desiring to record their agreement; now. therefore, In consideration of the premises and the promises hereinaEter contafi;ed, unless provided otherwise herein, Forest Service agrees to sell and permit Purchaser to cut and remove end Purchaser agrees to purchase, cut and remove Included Timber. This contract censists of three Divisions: A - Specific Conditions, B - Standard Provisions, and C - Special Provisions, together with Saie Area Map, Drawings and specifications for developments (if any) and such attachments may be provided for in Division C. Specific Conditions are numbered and apply tc lhe P~rt, Section, Subsection, or hem of the SIandard Pmvisians, as indicated hereunder. Other conditions of this contraci are stated in Division C Special Pro-isions. iN WITNESS WHEREOF, parties the hereto have executed this contract as of ti~e award date.

UNITED ST~.TES

OF AMERICA

":FL ~ DUN ll~ CAMPBELL FOREST SUPERVISOR Two Witnesses: GATEWAY LL~4BER COMPANY

19023

47th

AV NE WA 98223

Arlington

Secretary

o~ the co~oration

named as Purchaser herein;

that

said corporation; saidcontract dulysigned that was fg~ and in behalf said@orporati~n authority its governof by of ing body, and is withinthe scopeof its co.oratepow6d__

2400-6 Pete 101 (9/73)

Case 1:87-cv-00435-EGB

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The following conditions apply to the indicated AI - Location and Area, applicable to BI,I This Sale Area of 138

portions

of Division

B - Standard

Provisions

issued Sept. 1973 (Mo.th-Y~)

acres 24, To30No, Ro9Eo¢

more orlessislocatedin: W.Mo, surveyed, Snohomish County,

Section 23, NE~ section Washington°

A2 - VolumeEstimateand Utilization Standards, applicableto B2.1,B2.2, B2.4 and B6.4
MINIMUM TREE SPECIFICATIONS INCLUDE ONE MINIMUM PIECE DIAMETER BREAST HIGH

MINIMUM PIECE SPECIFICATIONS

SPECIES

AND PRODUCT

ESTIMATED QUANTITY AND UNIT OF MEASURE

i/ Pieces subject Pricing: Douglas-Fir

to Per M M Board Feet 9.0 9.0 9°0 8 8 6 6 33 1/3 33 1/3 33 1/3 200 3700 1300 Acres

Western Hemlock and Other Coniferous Species All Species Cedar

Material Subject to Per Acre Pricing: (That which does not meet the above specifications.) Utility (Pulp) and Special Cull i__/ A PIECE IS ONE OR MOP~E AI3
TOTAL

RODUCTS

109 9°0 12 6 N/A (ONE OR MORE SCALING SE(4ENTS) C( ~TAINING AT LEAST

5200 MBF 109 ACP~ES applicable to B2.3; acres are approximate: Number Acres 104 5 (170 M BD FT)

A3 - Timber Designations,

Clearcutting Units (B2.31) Specified Road Clearing (B2.32) OverstoD,-Removal Units (B2.33) Understory-Removal Units (B2.34) Individual Trees (B2.35) Incompletely-Marked Timber (B2.36) A4 - Dead Trees Required to be Felled, Size Requirements: 15 applicable

2

to B2.12, B2.3 and B6.4 12 inches d.b.h.

feet high and

Dead trees to be cut as part of Road Construction will be described in Sec. 201o Number Limitations: Applicable only if Sale Area Map indicates there are subdivisions where timber is to be designated after date of sale advertisement, In addition to dead trees felled within Clearcutting Units, construction clearings and other authorized development clearings, no more than N/A dead trees must be felled within subdivisions, or those portions thereof, where timber is designated after date of sale advertisement. Number limitation does ~ or portions thereof, designated at time of sale advertisement.

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A5 - Timber PaymentRates, applicable Aba - For Species and Products

to B3.1 end B4.0 under B3.2
OF MEASURE REQUIRED DEPOSITS SLASH DISPOSAL S BASE iNDEX

to be Paid for at Rates Escalated
RATES

PER UNIT

SPECIES

AND

PRODUCT

UNIT OF MEASURE

ADVERTISED S

BID PREMIUM $

NONE

Abb - For Species

and Products to be Paid for at Flat Rates
RATES PER UNIT OF MEASURE REQUIRED DEPOSITS SLASH DISPOSAL $

SPECIES

AND

PRODUCT

UNiT OF MEASURE

BASE $

ADVERTISED $

BID PREMIUM $

i/

Pieces Subject Per M Pricing: Douglas-Fir

to M BD FT 9°62 250.08 250.08 6.38

Western Hemlock and Other Coniferous Species All Species Cedar ACRES Material Sub2ect to Per Acre Pricing: (That which does not meet the above specifications,)

8,62 8.62

126,30 258~78

103o70 151~22

230.00 410~00

6.38 6.38

Utility (Pulp) and Special Cull 1o83 1.83 1o83 A PIECE IS ONE OR MOR AI3 PRO )UCTS (C ~E OR MORE S 2ALING S ~;MENTS) CO ~TAINING AT LEASq NET CC For purposes "of convenience in collection and bookkeeping, Bid Rates stated in A5 include payment of deposits for sale area betterment required pursuant to 16 U.S.C. Required Deposits 2400.6, Page103 (9/73)

Case 1:87-cv-00435-EGB

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National

Forest

First Avenue Seattle, WA 98104 2450

Ray Hurlbert Gateway Lumber, inc. 27408 72nd Ave. Stanwood, VIA 98292

RE:

Eldred Creek Timber Sale Contract No. 062090

Dear Sir: Your letter of March 29, 1982, requested 153 days of Contrac~ Term Adjustment for time lost during the 1981 field seaso~. This is for tl~e entire ~ormal OperatingSeason which runs ,From June ] to October 31, (A20). I have reviewedyour plan of operation (Cf,.3)and the anr~ualsche.~|ule planned activities{B 6,3i) and ,~a~.foundtim follov~ing: Plan of Operations(C6.3) - this indicat~;s~hat :;our plans ~ere to begin loggingUnit No. 2 in June 1981 to be follo;.~eo Unit i~o. ] in by September1981. Annual Schedule of Najor Activities (~ 6.31). This indicated a change from your plan of operations. This revised schedule indicated that Unit No. i would be logged first, followed by Unit No. 2 in October, 1981. However,this schedule was not submitted to the DistrictRanger until October 6, 1981, or 25 days prior to the end of the Normal Operating Season. B6.31 requires that this schedule be submitted annually prior to commencing operations.Therefore, my decision ~ill be based on your ulan ef operationssubmitted ~n 19~0, since that is the only plan we had when you lost time. ~' Roao,:a. 305Ganc:~'.ODa~,'~~ were]].~.~e,. both {~,ys]~,p~. Repairs uotnroads zo were completed SepLe~Der b~ 24, l%~Jl,so access~.o the E~n~i['_e sale availableat tI~L ti~e.

Case 1:87-cv-00435-EGB

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Page 7 of 12

tinder the 1980 plan of operations,you lost 24 days from September1 to September 2g, 19~l. However, since an estimated 40 percent of Unit No. l could have been logged at any time from September l, I am granting only half the time lost. Therefore,pursuant to ~8.21, the TerminationDate on Al9 is adjusted to June 12, 1983. This covers y~ur loss of time of 12 days between September l, 1981 na September24, 1981, Sincerely,

BRUCE MATEEI~
B~UCEMATEER Timber Staff Officer cc: Monte Cristo

' '~'~'~. 0611cVMELCHER/j 5/82 c/04/I

, ~.~..-, ~/_...~,

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Mt. Baker-Snoqualmie National Forest

1022 First Avenue Seattle, Washington 98104 2450

GatewayLumberCo. 19023 47th Ave. N.E. Arlington, Washington 98223

Re: ELDRED CREEK Timber Sale Contract No. 06209-0 Wehave received your recent letter in which you request mutual cancellation of your ELDRED CREEK Sale Contract or Contract Term Adjustment for the 1982 operating season. I have reviewed your sale on the ground, and am not willing to consider mutual cancellation as you suggest. Immediately prior to your commencing operations, we will repair the road damageso that you may operate on your sale and complete your contract obligations. In regard to Contract Term Adjustment, I find thatyou are eligible 66 days as follows: Days in 1983 operating season Percent of sale area not available in 1982 operating season due to road damage Days of Contract Term Adjustment 153 43% 66 for

Therefore, pursuant to B8,21, the termination date in AI9 is adjusted to August 17, 1983. This covers your loss of 66 days by adding these days to your previous termination date of June 12, 1983. Your request for Contract Term Extension dated January I0, 1983 is being processed and the contract modification will be dent to you for s!.g~ature shortly. A condition of this extension is that you must submit Plan of Operations (C6.3) for our approval. Please send this to the Darrington District Ranger as soon as possible. A form for this..purpose.T.:~T:is at-tached for your use.

BRUCE MATEER Contracting Officer

Case 1:87-cv-00435-EGB
Forest

Document 17-3
(Timber Sale)

Filed 12/23/2005

Page 9 of 12 Contract No.
062090 Eldred

AGREEMEF:, TO MODIFY CONTRACT
1. It is mutually agreed-that the above designated timber ~e contract~ signed by

Gateway Lumber Company of thepurchaser and by DonR. Campbell Arl inqton , Wash i nqton , Forest Supervisor (Title) hereinafter for

(N=me)

19th dayof November,1979 ~/~~X~ the Un|tedStates of Amerlca of the as ~~R be extended to the 17th day of September, 1983 and be modified as follows: Pursuant B8.3 purchaser seeks conditional extension for the purpose of .... consideringthe conditionsoffered pursuant to B8.23 - Contract Term Extension,Forest Service hereby grants a 30 day conditionalextension during which period of time purchaser agrees not to cut or remove Included Timber from the sale area.

2. Pursuant to this mutuM agreement, the purchaser hereby agrees to cut and remove timber In strict the terms and provisions of the aforesaid contract a~ herein modified. IN WITNESSWHEREOF, the parties hereto have executed STATES thla modification of contract

accordance with all and siagulax 16th day

a~ of the 1/

of

August
By:

:

19~L.
UNITED OF AMERICA [-P "L~ ~''~-'k~ /

¯ ~ ,,,.
~

Bruce Mateer

Gateway Lumber Company

Title :

/'~'

~ WA98292

)

Camano Island,

~cret~ of t~e corporation named aa purch~r here n; that~I $,:~ ~ ~ ~v~ ~: ~ _ who si~ed this contract on behaH of the purcha~r w~ the~ - '~ t"~.:2 ~. ~ : of said co~oration; that said contract w~ duly signed for ~d ~ behalf of ~d corporation by authont'~-~f within the scope of i~ co~ora~ ~wera.

i~ governing

body, and

[CORPOR~T~sEAL S/ ~o

2400-9

Case 1:87-cv-00435-EGB

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ELDI~D CRERK

TO EXTEND MODI~ AND TIMBER SAtECONTRACT

1. It is mutually agreed, that the contract period of the ~bove designated timber sale contract~ signed by. W.J. Hammer, President of 19023 47th Ave. N.E. ~ Arlinqton, Washin_o~-on 98223 ~ hereinafter called ~]aepurchaser by and Bruce Mateer for Don R. Campbell, Forest Supervisor for the UnitedStateso£ America as of th 19th day of November 1979as heretofore modified, be extended to~85 >~x~ogg~X~>D~mx~te~i~x: and in addition be modified as follows: a. The rates to be paid for stumpage and required deposits, for all timber cut which is scaled on or after August 1 , 1983 are shown in A5b, revised

b. By revising A13, revised 2-15-8--3, which is attached hereto and made a part hereof. c. Add the following to A22 - Inapplicable Standard Provisions: Advance Deposits B4. 221 B4.23 Refund of Excess Cash (Continued on page 2 which is attached hereto and made a part hereof) . 2. Pursuant to this mutual agreement, the purchaser agrees to cut and remove timber in strict accordance with all "! and singular the terms and provisions of the aforesaid contract as herein modified. ¯ 3. IN W~TNESS WHEREOF, parties, the hereto have executed this agreenmnt to extend and modify contract as of of Y~' #~'/~/,'~ /~.~ : UN~ED STATES OF AMERICA ~ flae~day Contracting // -~" ~7~: ~- ";-~" Two Witn~ses := ~ ~-~y Bruce~ateer TitleOfficer GATEWAY L~IBER CO~P~

;,- -~ who si~ed this a~eement to of said corporation; " Z" ~: ~at said agreement to extend and modify contract was duly si~ed for and in behalf of said corporation by au~ofity of ~e gover~g body~ and is within the scope of its corporate powers. Corporate Seal~ Consent of Surety corporadOhnamedas purchaser herein: tha~ ~:",,, ~ ~~, ~:~ :, extend and modify contract on behalf of the puretiaser was then (surety) ~) hereby join in this agreement to extend the contract period and a~ee that our bond shall bind us, our heirs, executors, adm~istrators, successors and assi~s, and each and every one of us and tbe~ jointly and severally, in the same
manner as if said extended period had been ~eluded ~ the ori~nal period of contact to insure eomp~ance

W%

St.

Paul Fire

a Marine

Insurance

Co.

which our bond was given. Dated a~ RF'~TTI F, W~IIlNGTON In presence of: Witness

, this

20TH Surety

day of SEPTEMB____E_P.~ ,~85

Individual

(Seal)' (Seal)

St. Paul Fire ~ Marine Insurance Co.
t]usiness address

1700 FOURTH BLANCHARD & BUILDII'IG ~O1

Case 1:87-cv-00435-EGB

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Page 11 of 12

i ~greement

to Extend

and

M~dif~

cdntraCt

(continued)

Page 2

C.

Add the following

to A23 - List of Special

Provisions:

C4.221 (Option C4.23 (Option C4.231# C4.251# C4.252# C4.4 C5.12 C6.24# C6.25# C6.313# C6.341 C8.641 C9.2 C9.5

2) 2)

Advance Deposits (4/82) Refund of Excess Cash (4/82) Refund of Excess Extension Deposits (11/82) Deferral of Extension Deposits (i1/82) Extension Deposits (4/82) Payments Not Received (6/81) Use of Roads by Purchaser (2/82) Protection of Cultural Resources (6/81) Protection of Habitat of Endangered, Threatened and Sensitive Species (11/80) Special Cutting Schedule (3/71) Prevention of Oil Spills (6/81) Use of Timber (6/81) Disputes (7/80) Settlement (10/77) from A23: Protection of Cultural Resources (5/76)

Delete the following C6.24# c4.4 C5.12 C6.25# C6.341 C8.641 C9.2 C9.5 Add sale

Payments Not Received (2/76) Use of Roads by Purchaser (12/76) Protection of Habitat of Endangered Prevention of Oil Spills (6/78) Use of Timber (6/78) Disputes (11/75) Settlement (10/77) ~ea ahd Slash Disposal C5.411# Maps, revised Deposit 3/83. Schedule,

Species

(6/78)

By revising

- Road Maintenance

revised

1/27/83. and

And add the provision made a part hereof.

pages from the above which

are attached

hereto

Case 1:87-cv-00435-EGB

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A5 - Timber Payment R~es, applicable B3.1 and B4.0 to

UNIT OF MEASURE

BASE INDEX

None

Redetermined
UNIT OF MEASURE

SPECIES

AND

PRODUCT

BASE

s

SUBJECT PI IR M PRICNG: TO I_/ PIECES iM Bd Ft 9.62 Douglas-fir 8.62 Western hemlock andM Bd Ft other coniferous species 8,62 All species cedar M Bd Ft MATERIAL SUBJECT PERACRE TO PRIIING: (That which does not meet the above %-pecifications Utility (pulp) and Acre 1.83 special cull

250.08 126.30 258.78

103.70 151.22

250.08 230.00 410.00

15.54 15.54 15.54

I

1.83

---

1.83

N/A

I/ A piece is one or more Al3!produ~--(.one or m( -e Scal segments containing ~ , at least 30 board feet net scM~e. .~
m &5 ~-h~d~ ~yme~" oi de~t~ ~ sale ~e ~6 li~ C ~:'~614. ~ea betterment r~uired SUCh DeW'sits pursuit

~sed 2-15-83 .....

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CULVERTS
i EST;MATE'D COST

DRAINAGE ACCESSORIES

AND

SPAN

i AI

Fa

NSTALL

IN

..... ~ NL,

~1 ~E

None

A13 - Scaling instructions

and Speci~icatians~ applicable to B6.8 Instractions: FSM 2443.7

Name and Date of Governing

- Thicd Party Scaling, (and R-6

Supplement to FSH 2409.11 for West Side Log Scaling

through September 1978)

SCALING SPECIFICATIONS

LENGTH RANGE

All species

logs

40

6+

8-40

12 + 2 for each I0' over 40'

Case 1:87-cv-00435-EGB

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Repl To: 24~0 Y Date= DEC19 1985
Gateway Lumber Company 1206 North Shore Drive Camano Islande WAo 98292 Re= Eldred Creek Timber Sale Contract No, 062090 --

a partlclpon¢ .in the ~Slde class ~¢[on sul¢~ ~e should have glven th~s c~ntrac¢ a conditional extension to keep Che contract In forc~ until t~e suit ~as sealed, Therefore~ Chis conCr~t Is hereby conditionally e~ended from l¢s p~esent termination date until dissolved, ~ felling or re~val of ¢l~er Is under~ondl~lona! ~tenslon. This condltlonal exCenslon Augus~ 18~ 1985, You sh~be advised Cha¢ Che. ~h Side tn~unc¢lo~as dissolved o~ ~ve~er and

Please con¢~¢ this office forms,

or the Darrlngfon Ranger DlsfPl¢f

for ]nfor~e¢lon

~ntracf lng Officer

Case 1:87-cv-00435-EGB

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United States Department of Agriculture

Forest Service

Mr, Baker-Snoqualmle National Forest

1022 First Avenue Seattle, WA 98104

Reply To= 2430 Date= Aprll |8, 19~6 Oateuay Lumber Company 1206 North Shore Drive OamanoIsland~ WA, 98292 Gentlemen= This Is to ~v|se you that the North Side InJunctlo~ dissolved Novembe~ 29, 1985, Your Eldf'ed Creek Timber Sale, Contract No. 062090, awarded November 1979 was under a conditional extension that e×plrad when you failed to file Multi-Sale Extension Plan by December 29= 196~. Since this sale was not completed before defaulted sale, It explredw I consider It to be a

I do not plan to resell the sale. ThQrefore, d~ages will be based on an appraisal pursuant to B904, as of August 17~ 196~. When I have completed my determination of damages~ you ulll be notlfledo copy of thts S Incerel y, letter Is being .sent to your surety,

BRUCEA'T'F
BRUCE MATEER Contracting Officer c¢= Darrlngton RD Company

St. Paul Fire & Marine Insurance 1800 Park Place Seattle, ~A, 9810!

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United States Department of Agriculture

Forest Service

~ RO

2430 Resaleof Defaulted Contract, GatewayLumberCompany, #062090 (Your]tr.3/14) ForestSupervisor, Baker-Snoqualmie Mr. NF

Aprilg, 1986

Enclosed. a copy of the Regional is Attorney's advlce.After verification of the company's statusyou may proceed~o advisethe purchaser that the sale wl]] not be resold,and that therefore damageswill be basedon an appraisal of its termination as date pursuant C9.4. to If you have alreadymade the apprasial of termination as date you should send the calculation damagesalong with a bill for the amountowed,if of any, after reducing damagesby the amountof earnedeffective purchaser credlt, cash,not used. or

Q"

~~ENDA,, ,. of JoNEs Director TimberManagement
Enc]osures

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(a) tf remedying such breach requires on-the-ground action by Purchaser, Purchaser shall have 30 practicable operating days during Normal Operating Season to do so, except under emergency conditions not be delayed to prevent major damage. (b) If such breach does not require on-the-ground action by Purchaser, such breach shall be remedied within 30 calendar days. B9.4 Failure to Cut. In event of (a) termination for breach or (b) Purchaser's failure to cut designated timber on portions of Sale Area by Termination date, Forest Service shall appraise remaining Included Timber, unless termination is under B8.22. Such appraisal shall be made with the standard Forest Service method in use at time of termination. Damages due the United States for Purchaser's failure to cut and remove such timber meeting Utilization Standards shall be the amount by which Current Contract Value plus the cost of resale, less any effective Purchaser Credit remaining at time of termination, exceeds the resale value at new Bid Rates. If there is no resale, damages due shall be determined by subtracting the value established by said appraisal from the difference betnveen Current Contract Value and Effective Purchaser Credit.

If Purchaser has failed to cut individual trees in the portions of Sale Area cutover and there is no resale of such indlv~duaI trees, Purchaser shall pay Forest Service for cost of felling and removal or otherwise eliminating such uncut trees in addition to payment of damages described above, except for trees not cut for reasons stated in B6.4. B9.5 Settleraent If obligations of Purchaser have not been fully discharged by Termination Date, any money advanced or de~ositsd hereunder shall be retained to be applied toward unfulfilled obligations of Purchaser without prejudice to any other rights or remedies of Forest Service, Such funds may be treated as cooperative deposits under B4.225 for uncompleted work 30 calendar days after receipt of vcri~ten notice from Forest Service to Purchaser of work to be done and Purchaser's failure to deny the obligation or to do the world. B9.6 Contract Closure. The Forest Serv/ce officer si~nins this contract, his successor or superior officer shall give appropriate written notice to Purchaser when Purchaser has complied with the terms of this contract. Purchaser shall be paid refunds due from Timber Sale Account under B4.24 and excess cooperative deposits under B4.225.

DIVISION C Special Provisions In accordance with A23, the Sections, Subsections, and Items therein listed are attached and madea part hereof. This material is indexed by the numbering system used in Division B. The numbers after the C (whlch identifies material in this Division) indicate the Part, Section, Subsection, or Item of Division B, which is being supplemented or modified by each particular provision included in this Division.

128

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TIf<~ER SALE P.EPORT ~.~D AF.m~J~ISAL MT. BAX.ER-SNC,~UALMiE NATIONAL

DATE

DATE

DATE

DATE ~EV I E',CED ~Y: DATE

APF I%OV-EDBY:

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Page 7 of 12

:--- CAIRO--TYPE 7 .............................................. CAh~DT'fPE6 ..........................................................

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ELDRED CREEKDAMAGE APPRAISAL The Eldred Creek Timber Sale expired Con,tar, No. 062090 ~ Purchaser - Gateway Lumber Company uncompleted Augus, 17.1985.

All specified roads have been compie,ed and accepted. All rlgh,-of-way volume has been removed. Cash on hand $0,00 PerformanC:e Bond $144,000.00 Damages-~rlll be calcula,ed based on ,he difference In 1:he raise of ,he original Sale and ,he appraised value a, termlna, lon since ,his sa~e Is nor planned ~e reef fared. C9.4 does no, apply. 1. Con+r~, Value and Uncu, Volume~, Termlna, lon Da,e All specles cedar 1267mbf x $410.00 = $519~470.00 Douglas-fir " 197mbf x $250.08 = $ 49,265.76 ~s~ern heml~k and o,her 3589mbf x $~30.0~ = $82~.470,00 ~'~n I ferous spec les ~92mbf X $ 0.50 = $ 196.00 P~ 5445mbf , $1,394,401.76 AppralsedYalue at Termlna,lon All species cedar Doug as-f 1 r I Wes,ern hemlock and o~rher con I ferous spec les PA~4 1267mbf x $177.13 = $224,425.71 197mbf x $201.61 = $ 59,717.17 558gmbf x $ 52.75 = $189,247.97

_~3~gZmb~x $ 19.45 = ~ 5445mbf $461,015.25 Transaction Evidence ' 5445mbf x $ 6.70 = $ 36~481,50 $497,494.75 New South awarded 8/12/85 (only sale sold around ,hls time) Bid Premium $15.92 on cedar (4000mbf) = $65,680.00 Other species fixed 9500mbf Average overbid $65,680.O0/9500mbf = $6.70/mbf Damage Appraisal Report Forma, - FSM 24~.54--5,6 Appralsa! Prepared by Carol GladsJo, April 1~,1986

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ELDRED CREEK DAMAGE APPRAISAL Ca I Cu I at Ion of Potent I al Damages 1. Volume and Contract Value of Remaining Timber a. On Area Not Cut Over (Item 4) b. On Area Cut Over (1) Designated (a) Cut, But Not Removed (Item (b) Not Cut (Item (2) Not Designated, Cut, But Not Removed Item 1 ( (3) Material ~a~tedz(J÷em3) i Total RemaI n Ing Timber ~' ~ 2. 3. 4. 5. LiquidatedDamages - None Provided for Cost of Resale - Not Reoffered Less Effective Purchaser Credits - None Maximum Potential Damages

~ ~F 5445 0 0 0 L 5445

$ 1,394,401.76 0.00 0.00 0.00 0.00 1,394, 401.76 0.00 0.00 0.00' 1,'394,401.76

Appraised Value at Termination Date Is: $497,494.75 Less Than Maximum Potential Demag~ Timber Not Reoffered B. Calculatiod of Resale Value I~F 497,494.75

AppraisedValue at Termination: .a. Original Terms b. New Terms 2. 3. 4. Adjustmentfor C~anged Conditions Re~ele Bid Value Line (B2) + (B3)

5445

5. Resale Value
Co

497.494.75

Calculatlonof Damage~ i. Maximum PotentlaI Damage (AS) 2. 3. 4. 5. Resale Value (BS) Damages(A5) less (B5) Unobl tgated Cash on Ha_nd Additional Due From PurChase .. :'~_. ~ ,394,40! .76 497.494.75 896,907.01 0.00 . 896~907.01

" 6. Refund Due Purchaser

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¯ !:.'

~

United States __ Departmentof AgricuIture ~ I,~(

Forest Mt. Baker-Snoqualmie1022 First Avenue Service National Forest Seattle,WA. 98104

.

I.

CERTIFIED MAIL- RE~3JRN. RECEIPT. REOUESTED ReplyTo: 2450

/..~(~,.~

~ll.l~

" ~.-'

Date: August 13, 1986

~t~.b~l~ Jim Hammer c/o Smokey Point Lumber, t~ ¯ 19129 Smokey Point Blvd. Arlington,WA. 98223 /~

~i
~ .4~

GentIemen : 'On December 29, 1985 your Eldred Creek Timber Sale, Contract #062090 expired uncompletedwhen you failed to submit a Multi-SaleExtension Plan. Accordingly,I have determineddamages due the United States pursuantto Provision B9.4 - Failure to Cut. Enclosed is a Bill for Collection, due August 25, 1986. for such damages. I have consideredyour failure to complete the contractand the resultant Governmentclaim under the ContractDisputes Act of 1978.

I. You were awarded the Eldred Creek Timber Sale on November 19, 1979, on contractForm 2400-6 (9/73), with a terminationdate of March 31, 1983. 2. The contract was subsequentlyextendedfor two years to August 17, 1985 under the Chief, Forest Service, waiver of extensionpolicy. Since your ~ompany was a party to the North Side Lumber Company lawsuit (Civil No. 83-490-BU),the contract was given a conditionalextension until 30 days after the February 15, 1984 injunctionwas dissolved. The North Side injunctionwas dissolved on November 29, 1985. When you failed to submit a Multi-SaleExtension Plan by December29, 1985, the contract expired. No timber had been removed by TerminationDate. A decision was made by the ContractingOfficer not to reoffer the remainingtimber because of the presenceof critical S-8 soils on the sale area. B9.4 Failure to.C~, specifies the meana of determining damages due the United States for Purchaser'sfailure to cut and remove such timber meeting UtilizationStandards as subtractingthe value establishedby appraisal at TerminationDate from the difference between Current ContractValue and EffectivePurchaser.

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Gateway Lumber Company Pursuantto B9.4, damages were calculatedas follows: Effective PurchaserCredit Current Contract Value of uncut timber Appraisedvalue at Termination Total damages Less cash on hand Amount owed by purchaser Decis io__n __

Page 2

5.

None $1,394,401.76 497.494.75 $896,907.01 None $896,907.01

It is my decisionthat damages are owed the United States and ~he determinationof such damages is corr~ct and in accordancewith Standard Provision B9.4 - Failure to Cut. Therefore,Gateway Lumber Company is liable to, and must pay the United States the sum of $896,907.01. This is the final decision of the ContractFSg Officer. This decision may be appealed to the AgricultureBoard of Contract Appeals. If you decide to make such an appeal, you must mail, or otherwisefurnish written notice thereof, to the AgricultureBoard of Contract Appeals, within 90 days from the date you receive this decision. A copy thereof shall be furnished to the ContractingOfficer from whose decision the appeal is taken. The notice shall indicatethat an appeal is intended,should reference this decision, and identify the contract by number. In lieu of appealing to the AgricultureBoard of Contract Appeals,you may bring action directly in the U.S. Claims Court, within 12 months of the date you receive this decision. Sincerely,

BRUCE MATEER ContEactingOfficer Enclosure cc: ~arringtonRD St. Paul Fire & Marine Insurance Company 1800 Park Place, Seattle,WA. 98101 F~A w/Bill for Collection

Case 1:87-cv-00435-EGB
U. So DEPARTMENT AGRICULTURE OF FORESTSERVICE ~

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PLACEOF ISSUE

~LL

FOR COLLECTION

Seattle,
DATE OFISSUE

8106186
Xt.Baker-Snoqualale )i.F. Gateway Ltm~er C~pany 1206 Noah Shore Drtve Cama.oIslaed, t~A 98292 10~2 Firs~81~. Seattle,

DESCRiPTiON

AMOUNT

Eldred CreekTlmberSale, Contract 8062090 Bill for Collection for damages
$896,907.0l

TS05

062090

8/25/86

$896,907.01

TRANS, CODE

APPROPRIATION (F,S,)

PRC~ECT AMOUNT

I

I

I

I

I

I

I

I

I

I I I

7052

$896,907.Ol

TOTAL

Case 1:87-cv-00435-EGB

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1N THE UNITED STATES COURTOF FEDERALCLAIMS GATEWAY LUMBER CO., et al. (Gateway LumberCo.), Plaintiffs, Consolidated under lead case No. 87-435C ~o. 87-435C) (Judge Bruggi1~)

THE UNITED STATES, Defendant.

DECLARATION OF CHRISTINE ANDERSON IN GATEWAY LUMBER CO. v. UNITEDSTATES. NO. 87-435C I, Christine Anderson,ama contract AdministrationForester in the Forest Service RegionalHeadquartersOffice for the Pacific North~vestRegion. I amalso a contracting officer on the OlsqnpicNational Forest and have beensince I985, as well as a contracting officer on the Mt. Baker-Snoqualmie National Forest since 1993. I havereviewedthe official Forest Service contract files and records pertaining to the Eldred CreekTimberSale whichis the subject of this case. In making this declaration, I have relied uponthe infol~nation contained in the Forest Service's records concerningthe Eldred CreekSale, as ~vell as mykno~vledge morethan thirty years of experience as a Forest Service and contracting officer, appraiser, and pre-sale administrator. 1. OnFebruary 12, 1979, the Forest Service, United States Department Agricnlture of ("Forest Service"), advertised for sale certain timber located ill the Mt. Baker-Snoqualmie National Forest in Washington State. The sale was namedthe "Eldred Creek Sale." D. App. 1 ]

~ "D. App.__"refers to the cited page(s) in the appendix accompanying motion. our

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2. Onthe samedate, the Forest Service issued a "TimberSale Prospectus" for the Eldred CreekSale, containing information for prospective bidders concerningthe timber and the terms and conditions of its sale. D. App.2-9. According the volumeestimate set forth in the to 2 prospectus (and in the timber sale contract), the Sale included an estimated 5,200 MBFof merchantabletimber located in t~vo clearcutting units. Thetotal estimated volumeincluded the folloxving species and estimated volumes: 3,700 MBF Western Hemlock of and Other Coniferous Species ("H&O");1,300 MBF Cedar ("C"); and 200 MBF Douglas Fir ("DF'). of of TheSale also included an additional volume utility pulp and special cull material located of throughout109 acres of the sale area that wassubject to per-acre pricing ("PAM'). App. D. As further indicated in the prospectus, the Sale called for the construction and reconstruction of approximately2.2 miles of specified roads. D. App.6. Theprospectus stated that the coutract te~anination date xvas to be March 1983. D. App.4. 31, 3. Thetotal advertised value of the EldredCreekSale, established by a Forest Sen, ice appraisal, was $853,940. D. App. 10. 4. The Forest Service conducted bidding for the Sale on March14, 1979. Gateway Lumber Company ("Gateway")~vas the high bidder, among eight, with a total bid value $1,434,216. D. App. ll. 5. OnNovember 1979, the Forest Service a~varded Gatewaythe Eldred Creek Timber 19, Sale Contract. Underthe temas of the contract, Gateway obligated to cut, remove,and pay was for all of the timber included in the Sale by the contract temfination date, March 1983. 31,

2 "MBF" a unit of measurementmeaning"thousand board feet." Thus, 1 MBF is equals one thousandboard feet of timber. -2-

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However, contract did not require Gateway complete the specified roads because Gateway, the to as a qualified small businessenterprise, elected to havethe Forest Se~-,,ice (througha contractor) perfomathat task. D. App. 12-14. 6. Thereafter, by letter dated May 1982, the Forest Service, pursuant to Standard 3, Provision B8.21, ~anted Gateway contract term adjustment that adjusted the termination date a to June I2, I983. D. App. 15-16. 7. Oneyear later, on May 1983, the Forest Sea-vice, pursumatto StandardProvision 20, B8.21, gmatedGateway second contract term adjustment that adjusted the temaination date to a August 17, 1983. D. App. 17. 8. OnAugustI6, 1983, the parties executed an agreementto extend the contract termination date by thirty days, to September17, 1983, to allow Gateway time to decide whether 3 accept a further extension available under a then-recent Forest Service policy. D. App.18. to 9. Gateway decided to accept the extension. OnSeptember20, 1983, the parties executed an ageementto extend madmodify Gateway's contract. The agreement, amongother things, extended the contract temaination date by twenty-three months, to August17, 1985. D. App. 19-22.

3 Applicableregulation in effect duriug the relevant period attthorized the Forest Service to grant extra-contractual extensionsof timber sale contracts upona finding that tbe substantial overriding public interest justified the extension. Se_~e36 C.F.R.§ 223.8(f)(2) (1983). Under authority, the Chief of the Forest Service, during tbe early I980s, adopted the SOFT and SOFT I II policies allowingcontract extensions due to tbe then-depressedmarketsfor forest products. TheSOFT policy authorized extensions of up to t~vo years for sales sold before January 1, 1I 1981, with termination dates prior to April I, 1985. Gate~vay'sEldred CreekSale qualified for an extension under this policy. -3-

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I 0. Theparties later a~eed to conditionally extend the termination date beyondAugust 17, 1985,until a date thirty days after dissolution of a district court injunction issued in North Side Lumber v. Bloclt, No. 83-490 (D. Or.). D. App. 23. Co. 11. Gateway'sEldred Creek contract ultimately expired on December 1985, thirty 29, days after dissolution of the NorthSide injunction. Byletter of April 18, 1986, the contracting officer notified Gate~vay that the contract had expired uncompleted that the Forest Service and had decided not to resell the sale. D. App.24. Thecontracting officer's notice to Gateway that the Forest Service had decided against a resale was based upon an April 9, 1986 memorandum to the Forest Supervisor, Mt. Baker-Snoquahnie National Forest, from the Forest Service Regional Office. D. App. 25. 12. At the time the contract terminated, Gateway removedno timber from the had two clearcutting units included in the sale. During October and November 1983, Gateway removeda total of 147 MBF right-of-way volume. This included